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Lunar Monthly Update

We believe the current environment for private equity investment in China is more compelling than it has been for the past several years.

• Global fears have driven valuations lower world-wide. Chinese equity markets have performed poorly. Liquidity has tightened in China as policy makers address inflation, and volatility has risen.

• This is the perfect environment for investors who can provide stable, long term capital and a commitment to driving value creation.

• In many ways, the current environment has helped to educate entrepreneurs and management teams (or in some instances, serve as a 'baptism by fire') as to the importance of their long term strategies for building their capital structure, partnerships and shareholder base.

• For our firm that has meant an increasing opportunity to become more involved in helping management teams solve challenges.

• We are seeing an increasing number of 1) minority stakes where we can play an active role in management and 2) majority stakes where we are able to effect a higher degree of control and involvement.

Lunar | August 15, 2011